ROCK OF AGES CORPORATION 
By Rock of Ages Corporation (NASDAQ:ROAC) announced today that net income for the second quarter of 2007 increased to $3,942,000, or $0.53 per diluted share, compared to a net loss for the second quarter of 2006 of $307,000, or $0.04 per share, driven by higher revenue and profit margin in each of the Company's three operating segments.
"In addition to top-line growth, our solid second quarter performance reflected the beneficial impact of our cost reduction programs and productivity enhancing investments over the past two years. We continue to expect the Company to be profitable for 2007 as a whole, compared to a loss from continuing operations for 2006 of $0.81 per share," said Chairman and CEO Kurt Swenson.
Swenson said that retail backlog at June 30, 2007 was up by about $1,000,000, or about 17%, to approximately $6,800,000 compared to about $5,800,000 on July 1st last year, and backlog in the manufacturing segment increased approximately $640,000, or about 7%, to about $9,600,000. "Our new retail pricing structure contributed to an improvement in retail gross margin for this year's second quarter to 57.9%, comfortably within our target range. The increase in gross margin in our manufacturing segment to 38.2% for this year's second quarter from 29.5% a year ago reflected a favorable mix of business, the absorption of fixed manufacturing costs from higher revenue and higher efficiencies associated with new equipment placed in service in 2006 and 2007. While winter weather patterns that extended into April this year kept quarry gross margin about unchanged for this year's second quarter and first half versus the same periods of 2006, we expect improved quarry performance in the second half of 2007, compared to 2006, based on strong demand for our granites and the likelihood of improved recoveries and efficiencies compared to the prior year, particularly in our Bethel White quarry."
Second Quarter Results
For the three months ended June 30, 2007, net revenues increased 8.7% to $27,326,000 compared to $25,142,000 for the second quarter of 2006, as quarry revenue increased 9.1% to $7,683,000, manufacturing revenue increased 9.1% to $8,767,000, and retail revenue increased 8.0% to $10,876,000.
Gross profit for this year's second quarter increased 19.7% to $11,588,000 compared to $9,684,000 a year earlier. Quarry gross profit increased 10.6% to $1,942,000; manufacturing gross profit increased 41.4% to $3,350,000; and retail gross profit increased 13.3% to $6,296,000.
SG&A expense declined 25.7% to $5,901,000 for the second quarter of 2007 compared to $7,946,000 for the second quarter of 2006. SG&A for last year's second quarter included retail restructuring costs of $1,686,000; there were no comparable costs in this year's second quarter. Exclusive of the impact of restructuring costs, SG&A expenses declined $359,000, or 5.7%, compared to the second quarter of 2006.
Total divisional operating income increased to $5,687,000 for this year's second quarter compared to $1,738,000 for the second quarter of 2006, reflecting higher operating income in each business segment versus prior year. Excluding the restructuring charge, operating income in the retail division more than doubled for this year's second quarter compared to the second quarter of 2006.
Unallocated corporate overhead was $1,169,000 for the second quarter of 2007 versus $1,289,000 for the same period of 2006.
Income from continuing operations for the second quarter of 2007 was $3,942,000, or $0.53 per diluted share. This compares to a loss from continuing operations for the second quarter of 2006 of $308,000, or $0.04 per share.
Six Months Results
For the six months ended June 30, 2007, revenue increased 2.6% to $37,705,000 compared to $36,754,000 for the first six months of 2006. Gross profit increased 7.8% to $12,128,000 compared to $11,249,000 for the same period a year ago.
Total SG&A expenses declined 24.3% to $11,098,000 for the first half of 2007 compared to $14,662,000 for the first half of 2006, which included the $1,686,000 restructuring charge mentioned above.
The net loss for the first six months of 2007 was $2,610,000, or $0.35 per share. This compares to a net loss for the first six months of 2006 of $7,355,000, or $0.99 per share.
Balance Sheet Item
The Company's credit facility with the CIT Group is scheduled to expire on October 27, 2007 and, accordingly, the entire amount due under the credit facility is classified as a current liability as of June 30, 2007. The Company is in discussions with CIT on the renewal of the facility.
Conference Call
Rock of Ages has scheduled a conference call at 11:00 a.m. EDT today. A live webcast may be accessed from the Audio Presentations link at www.RockofAges.com/investor. A replay will be available after 1:00 p.m. EDT at this same Internet addresses, or at 800-633-8284, reservation #21342457.
About Rock of Ages
Rock of Ages (www.RockofAges.com) is the largest integrated granite quarrier, manufacturer and retailer of finished granite memorials and granite blocks for memorial use in North America.
Forward-Looking Statements
This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about our business or expected events based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual events, results or outcomes may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: our ability to successfully execute staff productivity improvements and sales and marketing programs; our ability to form and maintain relationships with funeral directors and other death care professionals; our ability to maintain compliance with our covenants in our credit facility; our ability to maintain and expand our relationships with independent retailers; changes in demand for our products; the timing of customer orders and deliveries; the impact of competitive products and pricing; the success of our branding programs; the excess or shortage of production capacity; weather conditions; and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports including, but not limited to, the risks discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2006. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
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| Three Months Ended |
| Six Months Ended | ||||||||||||||||||||||||||||||||||
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| June 30, |
| July 1, |
| June 30, |
| July 1, | ||||||||||||||||||||||||||||||
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| 2007 |
| 2006 |
| 2007 |
| 2006 | ||||||||||||||||||||||||||||||
Net revenues: |
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| Quarry | $ | 7,683 |
| $ | 7,041 |
| $ | 11,672 |
| $ | 10,797 | |||||||||||||||||||||||||||
| Manufacturing | 8,767 |
| 8,033 |
| 12,725 |
| 11,953 | |||||||||||||||||||||||||||||||
| Retail | 10,876 |
| 10,068 |
| 13,308 |
| 14,004 | |||||||||||||||||||||||||||||||
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| Total net revenue | 27,326 |
| 25,142 |
| 37,705 |
| 36,754 | ||||||||||||||||||||||||||||||
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Gross profit: |
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| Quarry | 1,942 |
| 1,756 |
| 832 |
| 1,094 | |||||||||||||||||||||||||||||||
| Manufacturing | 3,350 |
| 2,369 |
| 4,082 |
| 3,003 | |||||||||||||||||||||||||||||||
| Retail | 6,296 |
| 5,559 |
| 7,214 |
| 7,152 | |||||||||||||||||||||||||||||||
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| Total gross profit | 11,588 |
| 9,684 |
| 12,128 |
| 11,249 | ||||||||||||||||||||||||||||||
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Selling, general and administrative expenses |
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| Quarry | 769 |
| 704 |
| 1,495 |
| 1,599 | |||||||||||||||||||||||||||||||
| Manufacturing | 1,013 |
| 952 |
| 1,941 |
| 2,183 | |||||||||||||||||||||||||||||||
| Retail | 4,119 |
| 4,604 |
| 7,662 |
| 9,194 | |||||||||||||||||||||||||||||||
| Retail restructuring costs | -- |
| 1,686 |
| -- |
| 1,686 | |||||||||||||||||||||||||||||||
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| Total SG&A expenses | 5,901 |
| 7,946 |
| 11,098 |
| 14,662 | ||||||||||||||||||||||||||||||
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Divisional operating income (loss) |
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| Quarry | 1,173 |
| 1,052 |
| (663 | ) |
| (505 | ) | |||||||||||||||||||||||||||||
| Manufacturing | 2,337 |
| 1,417 |
| 2,141 |
| 820 | |||||||||||||||||||||||||||||||
| Retail | 2,177 |
| (731 | Share
© Business Wire - 2007
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